Popular stablecoin issuer, Paxos has tapped leading DeFi lender MakerDAO with a proposal to raise the debt ceiling of its Pax USD (USDP) stablecoin. The partnership proposes that USDP holdings be increased to $1.5 billion in the DAO’s reserve. The current debt ceiling is $450 million.
As per the proposal posted on Maker’s governance forum, Paxos would pay monthly marketing fees to the DAO for maintaining reserves above a threshold of 1.5 billion USDP. The marketing fee would be 45% of the Effective Federal Funds Rate.
At the time of writing, the federal interest rate stood at 4.3%, which would mean up to $29 million in annual revenues for MakerDAO. “The marketing fees are defined to automatically reflect interest rate changes and will not expire after a set amount of time,” the proposal read.
The proposal has a provision of increasing the threshold to $2 billion by 2024. It is currently in the discussion stage and will move ahead for a vote if community members deem it appropriate. The response so far has been optimistic.
Paxos’s proposal is in line wit …
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Source: Cryptocurrency - investing.com
